Managers like to talk about how things used to be. When they were still queuing at the German company headquarters to go to China for a well-paid job. Beijing, Shanghai, Shenzhen – these were the places of longing for German industry and everyone who worked there for years. China was a market worth billions, a sales hit with dream returns, a safe bank – and basically a sure-fire success for managers, salespeople and engineers who were willing to move. China became the single most important market for corporations like VW. But also a place where you paid a high price for your dream sales: the price of dependency.
Curfew for millions – that’s not very tempting
Then came the Covid pandemic and business first became more difficult, then almost impossible. The complete lockdown of the economic metropolis of Shanghai, which was de facto closed for two months at the beginning of April, shows how quickly it can happen. Curfew for millions of people, managers who no longer came out of their homes, let alone to the nearest airport.
Corona policy in Chinese, that means a zero-Covid policy, and with that also: Those who are infected are housed in special quarantine facilities. That children are forcibly separated from their parents if they are not infected – for western ones expatriate a process that takes some getting used to.
Just quickly move to China, become country manager or head of sales? With huge lockdowns, long quarantine periods and the prospect of fewer and fewer flights operating between the continents? Maybe not. “It’s difficult to find someone who still wants to travel to China,” says Bettina Schön-Behanzin, Vice President of the EU Chamber of Commerce in Beijing.
Beijing must now “regain confidence”
The chamber conducted a survey among its member companies, the result: critical, the mood in the basement. According to the results of the survey, the strict curfews, the tough entry restrictions and the broken supply chains in many central places would put a heavy strain on European companies’ business in China. China must now allay the fears of companies and “win back trust with a clear plan,” says Schön-Behanzin. Between February and March, 620 companies took part in the survey on the business climate of European companies. In order to find out how much the lockdown in Shanghai had affected the mood, many companies asked the same questions again at the end of April. In the meantime, not only had the metropolis of Shanghai been paralyzed – Beijing’s position on foreign policy issues, such as Russia’s attack on Ukraine, also worsened the mood.
Zero Covid policy and the Ukraine war would have “significant destabilizing effects on the China activities of European companies,” according to the chamber. The numbers speak for themselves: Three quarters of the members stated that the strict corona measures had had negative consequences for their operations, 92 percent felt the supply chain problems, such as those that arose when entire ports were closed. And: 23 percent of those surveyed are probably thinking about stopping new investments in China for the time being and distributing the money to other markets. “Some companies are considering investing in other markets that offer more predictability,” says Schön-Behanzin. Of course you can look for alternatives in the region, relocate to Vietnam or Thailand. But China is the second largest economy in the world – and so it is not surprising that corporations do not want to break away from China. An open criticism of Beijing’s Covid strategy, which has obviously missed its target in recent weeks, but at the same time has what it takes to tear the entire global economy into the abyss? Difficult.
Zero Covid strategy also means in Shanghai: workers who spray each other with disinfectant spray.
(Photo: Hector Retamal/AFP)
If only because one suspects that the government in Beijing may not have waited for Western interference in central issues such as the fight against Covid. And such interference would probably also be considered rather inappropriate. One would “rather not comment” on topics such as the Chinese zero-Covid policy, says the spokesman for a large German company. Another says they will continue to “invest in China.”
With modern vaccines against lockdowns
The positioning of the EU Chamber of Commerce in Beijing is all the clearer. The government should rather rely on the more effective mRNA vaccines for the omicron variant, such as those produced by Biontech/Pfizer or Moderna. Instead, however, vaccines are mainly used in China that are also developed and produced in the People’s Republic – primarily Sinopharm and Sinovac. In addition, the Vice President of the EU Chamber of Commerce recommended that Beijing would do well to follow the Singaporean model. After the start of the corona pandemic, the Southeast Asian city-state had implemented strict rules more than two years ago – and then opened it again.
Conclusion of the chamber: mass tests and lockdowns alone could not help to get out of the misery. “China must open its borders,” says Schön-Behanzin. The country has “all the means for a great comeback”.